By Ed Holmes and Matthew Oakley
Over the last four years, the UK has experienced the slowest rate of economic recovery outside the aftermath of major wars since the 1830s. This sluggish growth makes it vital that the unemployed are given the best possible employment support to assist them back into work and independence. But the evidence suggests that the main government agency to achieve this, Jobcentre Plus, is not up to the job.
This may be surprising to some. Its spokesmen are able to boast that some 75% of people claiming jobseekers allowance who come through its doors are off benefit again within six months.
What they fail to mention is that this number disguises a much more ingrained problem – that for too many claimants with significant problems, Jobcentre Plus has become a revolving door. Only around half of claimants leaving jobseekers allowance are still in work eight months later, a third are claiming again.
This is not to say that Jobcentre Plus is bad at everything. By international standards it is actually quite cost effective at administering benefits. Despite significant budget cuts and new workload demands, it has successfully delivered some limited reforms such as a new job search system and more flexibilities for frontline staff. But management and personal adviser performance are largely still measured on their success at achieving the very narrow goal of getting people off their current benefit as fast as possible – “off flow” in the jargon.
Stories frequently emerge of advisers being set arbitrary targets to achieve this and being forced to find inventive ways to fulfill their quota. While this may look great in terms of headline statistics, simply cycling vulnerable claimants between different benefits or short spells of work before returning to benefits is completely ineffective, both for the claimant and the taxpayer.
Using off flow as a measure of success also creates another perverse incentive to treat claimants largely according to how long they have claimed their current primary benefit, and what benefit they are claiming, rather than their underlying barriers to work.
For the vast majority, this means that effective employment support is often delayed by up to a year, by which time morale has been sapped and barriers to work will have increased, increasing costs both in terms of benefit spending and the cost of addressing these barriers.
Some 35% of claimants who reach the government’s private and third sector-led scheme for the long-term unemployed, the Work Programme, have been unemployed for three years or more, suggesting that provision made by Jobcentre Plus has not proven effective.
This may appear odd considering that, of all the problems facing the UK economy, employment looks like a rare bright spot on the surface. Hours worked in the economy and total and private sector employment have all exceeded their pre-recession peak, contrary to market expectations.
However, these numbers hide a much more ingrained problem, the growth of long-term welfare dependency. The number of households in which no one works rose dramatically during the recessions of the early 1980s and 1990s, rising from seven per cent in 1975 to almost 20% today, never having dipped significantly throughout the long boom.
If this core group of unemployed did not enter work when the economy was strong, it is still less likely they will benefit from what will likely be a slow recovery unless changes are made. So what needs to change?
One part of the solution is to ensure that the right to benefits comes with the responsibility of the claimant to do all they can to enter work. Research for the Department of Work and Pensions indicates that up to a third are not. This is unfair both to those in low-paid work struggling to earn enough to make a living, and to the vast majority who make every effort to return to work quickly.
So it is right that the government tighten up conditions. But on the other side of the equation, it is the government’s responsibility to ensure that appropriate employment support is provided so that claimants are able to fulfil these conditions.
To achieve this, we first need to accept that the length of benefit claim is not an effective way of determining what employment support is needed. Shifting the assessment of Jobcentre Plus towards measures of sustained employment and the earnings of their client groups, as private and third sector providers are currently assessed in the Work Programme, would be a good start.
By building a more detailed profile of claimants’ underlying problems, using information available to other government departments, segmentation tools developed in the private sector and testing new incentives and flexibilities for Jobcentre Plus staff, we can begin to develop a more effective approach. This would mean targeting the right level of support at claimants from day one of a claim.
Second, we need to acknowledge that Jobcentre Plus is, at core, a central government benefits delivery service. It is neither culturally nor organisationally able to deliver effective employment support directly.
Instead, it should act as a gateway to access these services, administering new screening tools to determine the appropriate level of support to be provided in the private or voluntary sector. The savings, which could be realised from the approach, are not trivial – in Australia, the use of such tools has reduced the cost of interventions by about half.
In the longer-term, Jobcentre Plus should become a cross departmental one-stop shop to access skills and careers advice, a CommunityLink to facilitate access to core government services (more details can be found in our report here.)
The UK economy has many challenges and reform of Jobcentre Plus is only part of the solution. Certainly selective use of statistics can gloss over its problems, but pretending that it is an effective vehicle to deliver targeted employment support is a luxury we can no longer afford.
Ed Holmes and Matthew Oakley are respectively the senior research fellow and head of the Economics and Social Policy Unit at the think-tank Policy Exchange. Their ongoing welfare series includes reports on rights and responsibilities in the welfare system, personalising employment support, improving conditionality, improving incentives for Jobcentre Plus and how to treat in-work claimants subject to conditionality under universal credit.
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